Germany’s solar industry agrees to cut in subsidies

TORONTO (ICIS)--?xml:namespace>Germany’s solar industry and the country’s government have agreed to a cut in subsidies for the sector, officials said on Thursday.

Chemical firms, including Dow Chemical and Wacker Chemie, have developed the solar and photovoltaic sector as an important market for their products.

Germany’s environment ministry and industry trade group BSW said they agreed to cut subsidies by up to 15% from 1 July and by an additional 9% on 1 January 2012 - with the extent of the reduction linked to the level of installed solar capacity.

Germany grants producers of solar energy, including domestic households with photovoltaic panels on their roofs, favourable feed-in tariffs for their electricity.

Those subsidies, among the most generous in the world, prompted households to install much more capacity than the government had anticipated - 7,000 megawatt in 2010 alone, instead of the 5,000 megawatt expected for that year.

Environment minister Norbert Rottgen said market prices for solar installations had fallen and the technology was successful, which meant it was time to reduce the burden the subsidies posed for taxpayers and electricity users.

BSW president Gunther Cramer agreed, saying the industry needed the continued acceptance from government and society.

Also, the solar industry could not grow too quickly as the use of renewable energy required large investments to revamp the existing grid into a decentralised energy supply net, he said.